Unearned Service Revenue Adjusting Journal Entry

Unpaid expenses are expenses which are incurred but no cash payment is made during the period.

Unearned service revenue adjusting journal entry. Such expenses are recorded by making an adjusting entry at the end of accounting period. If income method is used. Therefore only two third of unearned commission liability 3 600 2 3 will be converted into commission revenue at the end of the accounting period. For this purpose the following adjusting entry will be made on december 31 2016.

Learn how to prepare adjusting entries relating to unearned deferred revenue. Green light will record the following journal entry at the time of receipt. Before microtrain prepares its financial statements it must make an adjusting entry to transfer the amount of the services performed by the company from a liability account to a revenue account. Adjusting entry on january 31 to convert a portion of unearned revenue a liability to earned revenue.

The balance in the unearned service revenues liability account established when microtrain received the cash will be converted into revenue as the company performs the training services. Journal entries of unearned revenue. Adjusting entries for accruing unpaid expenses. A similar situation occurs if cash is received from a customer in advance of the services being provided.

Unearned revenue general journal entry. At the end of 12 months all the unearned service revenue unearned will have been taken to the service revenue account earned. After adjusted entries are made in your accounting journals they are posted to the general ledger in the same way as any other accounting journal entry. There are several types of adjusting entries that can be made with each being dependent on the type of financial activities that define your business.

Profalldredge for best viewing switch to 1080p. This video shows how to record an adjusting entry to earn previously unearned revenue.